In the Fall Economic Statement (FES), the Liberal government unveiled an initiative it calls the Canadian Mortgage Charter.
According to the statement, the charter builds on “existing guidance and expectations” regarding how financial institutions are expected to treat borrowers.
Deputy Prime Minister and Finance Minister Chrystia Freeland said Tuesday the charter is “one of the most important things” in the FES.
“I really recognize that with interest rates having gone up very quickly, there are many, many Canadians who are concerned about their mortgages going up. They are concerned about being able to afford to stay in their own homes,” Freeland said. “What we’re saying today is we understand this is a challenging situation and we are here to help.”
So what exactly is the Canadian Mortgage Charter, who does it aim to help, what rules does it lay out and how are its expectations enforced?
Is the Canadian Mortgage Charter a law?
No. The Canadian Mortgage Charter [CMC] is not a law and there are no plans to pass legislation enshrining it in law.
A Department of Finance official speaking on background told CBC News the best way to think of the charter is as a list of “rules and expectations” banks are expected to follow.
The only place the CMC rules have been or will be published, the official said, is in the Fall Economic Statement.
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What does the charter say?
The charter contains six guidelines regarding how banks are expected to treat “vulnerable borrowers” under financial strain. Under the charter, banks are expected to:
Allow temporary extensions on the amortization period for mortgage holders.
Waive fees and costs that would have otherwise been charged for mortgage relief measures.
Exempt insured mortgage holders from re-qualifying under the stress test when switching lenders at the time of a mortgage renewal.
Require banks to reach out to homeowners four to six months in advance of their mortgage renewal to inform them of affordability options.
Allow borrowers to make lump sum payments to avoid negative amortization or sell their principal residence without incurring prepayment penalties.
Waive interest on interest when mortgage relief measures result in mortgage payments that fail to cover interest payments on a loan.
Are any of these rules new?
The Finance official told CBC News that most of the measures existed already, but may have been unclear or difficult for consumers to find. Putting them in one place, the official said, makes it easier for vulnerable borrowers to learn what their options are.
One new rule is the requirement that banks proactively reach out to borrowers four to six months before their mortgages are up for renewal.
The other new addition is the requirement to give insured borrowers a pass on the stress test when changing lenders at the time of their mortgage renewal.
Who is a ‘vulnerable borrower’?
The mortgage charter does not define “vulnerable borrower.” The FCAC guidelines define a “consumer at risk” as someone “with an existing residential mortgage loan on their principal residence who [is] experiencing severe financial stress, as a result of exceptional circumstances, and [is] at risk of mortgage default.”
When banks reach out to all borrowers four to six months before their mortgages are up, borrowers can explain their unique financial situations to lenders and the two parties can work through their options. Banks do not independently decide who is at risk.
The Canadian Bankers Association (CBA) uses data from the major banks to determine the number of mortgages that are in arrears each month going back to January 1995.
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A mortgage in arrears is defined by the CBA as one that has not been paid for at least three months. According to CBA data, there were 5,065,516 mortgages in Canada as of Sept. 30 2023 and 0.16 per cent, or 8,140, were in arrears.
That percentage is up from 0.14 per cent in August, 2022, which was the lowest percentage of arrears since January 1995, when it was 0.50 per cent.
The CBA’s mortgages in arrears stats include data provided by 11 CBA members, but the CBA says credit unions and private mortgage companies also offer mortgages in Canada that are not captured by the arrears totals.
How are the rules and guidelines enforced?
The Finance official told CBC News that borrowers who are not offered the affordability measures outlined in the mortgage charter can file a complaint on the FCAC website.
The FCAC website says it investigates complaints involving federally regulated financial institutions, including banks, federal credit unions, authorized foreign banks, insurance companies and trust and loan companies.
The FCAC website says that it uses information gleaned from its investigations to “identify and address situations” but does not say what measures are used. The FCAC says the “numbers and types” of complaints it receives are reported to Parliament.
The Canadian Mortgage Charter says the federal government closely monitors financial institutions’ “implementation of and compliance with relief measures, including the FCAC’s guideline,” but does not say what enforcement measures are applied.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
